Vietnam Airlines to replace new 20 aircrafts

After completing IPO (Initial Public Offering) plan, Vietnam Airlines will replace all its fleet with modern airplanes of Boeing 787 and Airbus 350. The airline also appeals investors by listing share in stock exchanges.

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In the next three years, Vietnam Airlines will change all fleets of Boeing 777 and Airbus 330 into more modern fleet. The information has been issued by General Director of Vietnam Airlines - Pham Ngoc Minh and other leaders of the airline. The announcement was released in a press conference on equitization plan and Vietnam Airlines IPO plan. The initial public offering plan is expected to take place at the end of November 2014, according to updated information from the airline.

To specify, Vietnam Airlines fleet currently has 80 airplanes, including 10 Boeing 777 and 9 Airbus 330 (hiring or owing) According to Mr. Pham Ngoc Minh, all aircrafts will be replaced with more modern ones as Boeing 787 and Airbus 350. "Representatives of suppliers as Boeing and Airbus said that it is a second-to-none plan, when an airline renews all its fleet," Minh said. However, the general director explained that the plan is a part of a project on creating new appearance and management of Vietnam Airlines. Along with changing airplanes, leaders of Vietnam Airlines shared that the airline will open new direct route to the US as pledged. In addition, the airline's leaders pays more attention to economic issues, as the flying time of this route is 4 hours longer than that of the route to Europe, but the airfares are quite the same. "Therefore, after equitization, investors will likely to prefer routes to Europe to routes to the US," Minh said.

About Vietnam Airline IPO, determining the value of an enterprise is considered the key step in the process of IPO. At the Government’s regular meeting, the Minister of Transport has recommended the Prime Minister to ratify the evaluation result soon for the carrier to complete the detailed plan of IPO. This detailed plan is expected to submit in May 2014. The parent company will certainly do IPO and hold a shareholders’ meeting in the second half of 2014. If all processes go smoothly as intended, the equitization of Vietnam Airline is performed in September 2014.

According to Vietnam Airlines news, its total revenue in 2013 was 72.6 trillion VND, equivalent to 3.4 billion USD. The carrier also earned a pre-tax profit of 25.3 million USD. Nowadays, although there are some large foreign airlines investing in Vietnam market, it is still the leading and largest enterprise in aviation business of Vietnam. The IPO of Vietnam Airlines will be the first aviation equitization in the Southeast Asian countries. Therefore, it makes the value determination process more challenging. Mrs. Nguyen Thi Thanh Van, the representative of council member said that the airline is completing the disclosure and looking for the approval of authorities before registering in Stock Exchanges to transfer to investors at the end of October. The starting share's price of Vietnam Airlines is expected to be 22,300 dong per unit; the listed time has not specified.

In terms of strategic investors, Mr. Pham Ngoc Minh said that there is more than one airline paying attention to Vietnam Airlines, including ANA Nippon Airway (Japan). Besides, there are financial investors. "Strategic investors definitely have financial potential. However, the most important part is the long-lasting commitment of investors to the airline", Mr. Minh confirmed. On evaluating the current airline business, leaders of Vietnam Airlines shared that the competitiveness is more severe, especially in transcontinental routes. In addition, the business environment is increasingly threatened by dense and unpredictable crisis' factors. Therefore, airlines need cooperations, alliances, and supports to develop together.